Industrial metals were locked in recent ranges on Thursday, with investors anxiously watching other financial markets for direction rather than taking positions, fund managers and analysts said.
Benchmark metal copper, often seen as a gauge of the real economy, ended at $7,400/7,401 per tonne on the London Metal Exchange, up from Wednesday's last quote at $7,360/7,370. After sustaining heavy losses in the cross-market turmoil triggered by the collapse of the sub-prime mortgage lending market in the United States, metals investors were wary of making moves one way or another.
"For us, our aim is to sit on the sidelines and let the market tell us where it's going, rather than try to predict it," a London-based fund manager said. As an asset that has performed strongly - even at current levels, copper is up more than 15 percent since the start of the year - it was vulnerable to further selling to cover losses elsewhere, he said.
"The liquidity crunch is going to have a knock-on effect into asset management. There's been so much pain, there is going to be money pulled out of positions and a lot of book-squaring." Lead futures were up 2.7 percent or $85 at $3,185. Lead has been one of the best-performing metals on the LME this year, and at its current level is almost 90 percent higher than at the end of 2006.
"Given lead's strong fundamentals, we believe that prices have the characteristics of a coiled spring ready to vault higher," Barclays Capital said in a market report. "LME lead inventories are at a 27-year low and stand at only 1.7 days of consumption, producer and consumer stocks are being run down," the bank said.
Copper prices were supported by persistent labour unrest in Latin America and in Africa mining licences were revoked. Workers at Southern Copper's Cuajone and Toquepala mines and the Ilo smelter in Peru plan to down tools on September 12 in pursuit of an improved pay offer, union leaders said.
Southern Copper is controlled by Grupo Mexico, which has had its own share of labour problems in Mexico. Grupo Mexico urged police to reopen its giant Cananea copper pit in Mexico, closed by a month-long strike.
Also, the Democratic Republic of Congo has revoked copper and cobalt mining licences in Katanga province held by CAMEC and Savannah Mining. Copper production in the central African country was about 12,000 tonnes in 2006. Miners have ambitious plans to boost output in the country, which at its peak produced 475,000 tonnes of copper annually , but a government review of mining licences is causing uncertainty.
LME aluminium was up $2 at $2,530. Global miner Rio Tinto Ltd/Plc said it has completed the syndication of its $40 billion funding package for its $38.1 billion take-over of Canada's Alcan.
Tin was up $350 at $15,150. Indonesia's PT Timah Tbk, the world's biggest integrated tin producer, said it expected tin output to be 30-40 percent lower in the second half of 2007, compared with the first half.. Zinc was down $35 at $3,040 and nickel was up $500 or 2.5 percent at $28,300.
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